MUKUL KUMAR SHRAWAT,JM. -
(1.) AT the outset, it is necessary to mention that this Special Bench is hearing this case in view of the directions of the Hon'ble Jurisdictional High Court given in an Appeal titled as "Deepak R. Shah (petitioner)
vs. Income Tax Appellate Tribunal (respondent) in Special Civil Application No.15308 of 2013 dated
26.12.2013 wherein the observations as also the directions were as under:
"Heard learned advocate for the petitioner and Shri Syed for the respondents. The petitioner himself is also present in the Court and he was also granted audience at his request. The petitioner and Shri Syed informed the Court that the President of the Tribunal had constituted a Special Bench under the order dated 27.5.2011 constituting of three Members for deciding the following question: - Whether Shri Deepak R. Shah, Advocate and Ex -Accountant Member of the Income Tax Appellate Tribunal, is debarred from practicing before the Income Tax Appellate Tribunal in view of the insertion of Rule 13E in the Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963? The Special Bench accordingly heard and completed the hearing on 20.1.2012, however thereafter the decision is not pronounced. Shri Syed in addition to it, submits that there are intervening circumstances which are also required to be borne -in - mind in form of resolution/amendment of the Bar Council touching upon this aspect. The petitioner -in -person requested the Court that let there be a direction to respondent nos. 1 and 2 to constitute the Bench as now one member who had earlier heard the matter had retired and decide the reference afresh within a stipulated period of three months, to which Shri Syed did not have any objection. Accordingly, without going into merits of the matter, at the request of learned advocate for the petitioner and petitioner himself, this Court is inclined to dispose of the matter with a direction to respondent no.1 and 2 to re -constitute the Special Bench for deciding the Reference aforesaid within a period of three months from the date of receipt of the writ of this order. Meaning thereby the entire exercise of reconstituting Special Bench and hearing of the Reference and disposing of the same shall be completed within three months from the date of receipt of this order. Shri Shah the Petitioner, in view of above directions does not press this petition. Accordingly the petition is disposed of. The Court has not entered into merits of the matter and all the contentions of the parties are kept open. Rule discharged. No costs."
1.1 This Special Bench has been constituted vide an order u/s 255(1)(3) of the I.T. Act (hereinafter mentioned as the 'Act') by the Hon'ble President, I.T.A.T. The question referred to us is reproduced below:
Whether Shri Deepak R. Shah, advocate and ex -Accountant Member of the Income Tax Appellate Tribunal, is debarred from practicing before the Income Tax Appellate Tribunal in view of the insertion of Rule 13 E in the Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963 -
(2.) ON the date of hearing, Sri Deepak Shah, Ex -member Income Tax Appellate Tribunal appeared in person. In the beginning of the hearing itself, the Bench has placed a question that whether it is
competent for this bench to decide the issue as referred in the light of a judgment passed by Hon'ble
Allahabad High Court/ Lucknow Bench in the case of Dinesh Chandra Agrawal Vs. Union of
India (Service Bench No.62 of 2012) dated 19.01.12, because the Hon'ble Court has made an
observation that prima facie the interpretation of Rule 13E is, quote "beyond its pale of competence as
it has the jurisdiction to decide only the matters relating to tax appeals as contained in the
Income Tax Act vide Section 253 and 254 thereof" unquote.
2.1 The reply of Mr. Shah is that those words were nothing but an observation of the Hon'ble Allahabad High Court which was neither the order nor a ratio -decidendi. He has pleaded that this Bench is competent to decide this issue. He has also pleaded that a judgment of the Hon'ble Allahabad High Court is simply an 'interim order' through which the merits of the case have not been decided, therefore, an observation in the said order had not put any bar to decide the issue, as referred by the Hon'ble President, for the adjudication by this Special Bench.
2.2 Mr. Deepak Shah has referred Section 288 of the Act for the legal proposition that if he is being stopped appearing before the Income Tax Appellate Tribunal then his rights are infringed as laid down u/s.288 of the Act. The Tribunal being a creation of the Income Tax Act has to decide all such issues raised under any of the provisions of the Act, including Sec. 288 of the Act. If any one of the provision of the Income Tax is invoked then the aggrieved party has right to contest before the Tribunal. He has then explained that how he is entitled to appear before the Tribunal. He has explained that u/s.288(2)(iii) and (iv) the definition of "Authorized Representative" is incorporated; hence, he is entitled to appear before the Tribunal.
2.3 Next plank of his argument is that a sub -ordinate legislation cannot overrule and override a statutory enactment. He has explained that vide a notification dated 3rd June, 2009 issued by Ministry of Law and Justice, Department of Legal Affairs, a Rule 13E was introduced which says, quote "the President, the Senior Vice President, the Vice President and the Member of the Tribunal shall not practice before the Tribunal after retirement from the service of the Tribunal" unquote. He has thus pleaded that the same is merely a notification which should not override the main provision of IT Act, i.e., Section 288. Vide this Section it is provide that any legal representative who is entitled to practice in any civil court in India is an 'Authorized Representative' to appear before the Income Tax Appellate Tribunal or before any Income Tax Authority. He has commented that in support of this legal proposition there are ample of judgments; need not to be cited right now.
2.4 Mr. Shah has then referred his letter of appointment as an Accountant Member dated 28th of September, 2001 issued by Government of India, Ministry of Law and Justice, Department of Legal Affairs. He was appointed for the post of an Accounted Member in the Income Tax Appellate Tribunal which belonged to General Central Service "Group -A". At that time of appointment there was neither such restriction imposed nor informed to him.
Through this letter of appointment, it was mentioned that, quote " I am to request that in case you are willing to accept the offer of appointment as Accountant Member in the Income Tax Appellate Tribunal on the terms and condition mentioned above, your acceptance may be sent to this Ministry immediately and in any case by 10th October, 2001 at the latest. On receipt of your acceptance further instructions in regard to your posting etc. will be issued." Unquote. Therefore the argument of Mr. Shah is that had there been a restriction on law - practice after retirement before the Tribunal then he would not have joined the service. Now through this amendment/insertion in Rule 13E the Ministry is trying to change the said offer retrospectively which is ultra vires, as well as, against the natural justice.
2.5 His next plank of argument was that the conditions of Rule 13E are applicable to the members who have "retired" from the service of Tribunal. But in his case he had tendered his "resignation". He has stated that the fact of resignation is in public domain, and not even disputed by the Government of India. After resigning from the government job as an Accountant Member of the Tribunal, he was deprived of certain benefits. He was communicated by a letter dated 16th of August, 2010 by the Deputy Registrar that he being quitted the service on resignation shall not be entitled to any pension, gratuity or terminal benefits. He has said that it was nothing but a double jeopardy. On one hand due to the resignation he has not been allowed certain benefits and on the other hand he has also not been allowed to practice before the Tribunal. He has finally pleaded that once a Special Bench in the case of Concept Creations vs. Adl CIT (2009) 120 ITD 19 (Del.)(SB) had been established in the past and already taken up an identical reference, that too was pertaining to the applicability of Rule 13E, then in the like manner this Special Bench can also decide the question referred by the Hon'ble President pertaining to applicability of Rule 13E for an Ex - Accountant Member who has resigned from the service. According to him, only a portion of the said order ( Concept Creation ) was stayed but no other restriction has been imposed by the Hon'ble Allahabad High Court through the afore -cited order dated 19.01.2012, therefore rest of the ratio laid down is now required to be followed.
2.6 An another plank of argument of Mr. Deepak Shah before us is that as per the said notification vide Rule 14 of "Interpretation" it is provided that, "if any question arises relating to the notification of these rules the decision of the Central Government thereon shall be final". He has, therefore, pleaded that in the recent past the Central Government had appointed the Attorney General who has opined in the following manner (referred a letter of the Hon'ble President dated 13th of July, 2012): -
"The following clarifications by the Attorney General for India are relevant: -
13. I note that in the Statement of Case, it is stated as follows:
"In the light of above discussion it appears that findings / observations of the Supreme Court in the judgment of N K Bajpai would not affect the decision of Spl. Bench ITAT in the case of Concept Creations so far as it relates to right of practice before ITAT of those Members who have resigned and not retired in terms of Rule 13E"
I agree with this.
14. In the light of the aforesaid, I shall, answer the questions raised as under:
Q.(i) Whether in the light of Rule 13E of the ITAT Members (Recruitment and Conditions of Service) Rules, 1963, the decision taken in the case of Concept Creations by the ITAT can withstand the judicial scrutiny in the light of law laid down by the Supreme Court in the case of N K Bajpai?
Ans. Yes. The decision of the ITAT in Concept Creations case dealt with Rule 13E. The judgment of the Supreme Court in N K Bajpai's case deals with Section 129(6) of the Customs Act. This does not displace the earlier decision of the ITAT
Q -(ii) Whether a person who resigned as Member of ITAT can practice before various Benches of the ITAT in view of the provisions contained in Rule 13E of ITAT Rules?
2.7 Mr. Shah has also referred the final direction given in the said letter by the Respected President of the Tribunal to the Tribunal Benches, reads as under :
"In the light of the above opinion obtained by the Ministry, now it is time for us to put an end to all the disputes relating to the right of ex - Members of the ITAT to appear before the Tribunal. The sum and substance of this opinion is that the decision of the Supreme Court in the judgment of N K Bajpai has not overturned the decision of the Special Bench in the case of Concept Creations vs. Addl. CIT (2009) 120 ITD 19 (Del) (SB). Therefore, we may strictly follow the guidelines laid down in Concept Creations in the matter of deciding this issue. Consequently, the communication received from the Ministry of Law and Justice in F.No. A -60011/60/2012 -Admn. lll(LA) dated 19th April 2012 is to be treated as final in the matter and should be considered as having been issued by the Ministry under Rule 14 and Rule 15 of the Income Tax Tribunal Members (Recruitment and Conditions of Service) Rules, 1963. The matter should rest there.
This is brought to your notice so that you may appraise the Members in your Zone, to take a uniform view in the light of the Special Bench decision in the case of Concept Creations, as clarified by the Ministry."
2.8 He has thus vehemently argued that in a situation when the Ministry of Law has appointed Attorney General and on the advice of the said Attorney General the President of the Tribunal has given direction to allow the appearance then such direction should be treated as the decision of the Central Government in respect of interpretation of Rule 13E of the said impugned notification. He has thus contested that the bar imposed upon him is unjustifiable. He must be allowed to appear before the Tribunal, strongly advocated.
(3.) FROM the side of the Revenue, learned Standing Counsel, Mrs. Mona Bhatt, assisted by Ld. DR Mr. D.S.Kalyan CIT have appeared. From their side, a gist of submissions along with certain case laws, etc.
have been placed in the form of a compilation. She has raised a preliminary objection that this Tribunal
does not have jurisdiction to entertain the issue referred by the Hon'ble President. She has pleaded that
the question of service condition, appointment, retirement, resignation, etc., comes within the purview of
ITAT Recruitment and Conditions of Service (Rule, 1963). The correct forum for any redress is the
respected Central Administrative Tribunal. She has quoted Section 3(P) r.w.s. 28 of the Central
Administrative Tribunals Act, 1985, which is providing a cure of such type of grievance. The services of
ITAT Members are classified under Rule -8 of General Central Civil Services Class -I (Group -A); hence, an
appeal lies with Central Administrative Tribunal.
She has further pleaded that as per Section 253(1) and (2), an appeal is to be filed before the Tribunal against an order of the Lower Tax Authorities. The issue, presently under process of hearing, does not arise from any of the order of Income Tax Authority.
3.1 Ld. Standing Counsel has strongly challenged the maintainability of the above issue before this Special Bench and pleaded that the reference being not within the provisions of I.T.Act hence this Bench has no jurisdiction to decide it. She has also mentioned that the Tribunal being a creation of I.T.Act consequently has to operate and function in accordance to the provisions of the Act. This Bench cannot decide an unconnected matter. This Bench has no power to decide an issue which is related to the vires of a Rule, pertaining to the service condition, framed by the Ministry of Law. Therefore, on the above stated grounds, this Hon'ble Tribunal, with utmost respect, has no jurisdiction to decide the present issue, she has pleaded. Ld counsel has also mentioned that on the similar issue, the Hon'ble Special Bench has considered this issue and therefore, the decision in the case of Concept Creation (supra) is squarely applicable. The issue to be decided is whether Shri Shah, who is an Ex -Accountant Member, who has resigned after 03.06.2009 is eligible to appear before the ITAT. The facts are not disputed, as Mr. Shah was appointed under order dated 28.09.2001, confirmed on 29.11.2003 and voluntarily resigned on 01.04.2010. According to her the amendment in Rule 13E is prospective, and therefore, it will be applicable to those who have retired or resigned after 3.6.2009.
The general Rule of statutory interpretation states that Rule 13E which came into force with effect from 03.06.2009, being the service condition is applicable to those who are in service as on 03.06.2009. As Mr.Shah was in service on 03.06.2009, Rule 13E is applicable to him. Further, even for applicability of the Rule, the object, intent and purpose of the insertion are to be seen. A purposive interpretation is to be given to the Rule. Apparently, the object is to disallow ex -member to practice otherwise following events / eventuality may happen for eg.
(1) Bias against their own pears. ;
(2) Resignation versus retirement will create absurd proposition, resulting into that one class of person is allowed to appear and not the other.
(3) The proposition canvassed will induce members to resign before few days of their retirement.
For giving purposive interpretation in the present case, retirement and resignation has same meaning. The Department relies upon the case reported as CIT vs D.P. Malhotra 229 ITR 394 (Bombay).
3.2 With regard to the submission of Mr. Shah about applicability of Section 288 of the Income Tax Act, it is submitted that the said Section of the Income Tax Act is not required to be read in isolation. It is to be read along with Rule 13E of the ITAT Members Rules, 1963, because Section 288 of the Income Tax Act prescribes qualification or disqualification to practice, whereas Rules which are framed under Article 309 of the Constitution of India decide the conditions of service for the class of officers. Here, Mr.Shah has been classified as Group -'A' Central Government Officer. Therefore, there cannot be said to be any conflict. Therefore, the general provision will not prevail over the specific Rules which are farmed under Article 309 of the Constitution of India. Therefore the contention of Mr. Shah that under Art. 19(1)(g), he has right to practice, is to be read with the reasonable restriction imposed under Art 19(6) of the Constitution of India.
3.3 During his rejoinder Mr. Shah was asked a question by the Bench that whether it is within our jurisdiction to decide the legality as also the vires of a Service Rules and in his fairness he has given the answer in negative.
We have heard both the sides at length. From the records of the case, we have noted that learned Sri Deepak R. Shah was appointed as Accountant Member of the Income Tax Appellate Tribunal on 29th of
November, 2001. He was confirmed on 29.11.2003. Later on, he has resigned as a Member of the Tribunal
on 01.04.2010. At this juncture, it is worth to mention that Rule 13 -E in (Recruitment and Conditions of
Services) Rules, 1963 was inserted vide a notification dated 3rd of June, 2009, already reproduced supra.;